Wednesday, 2 March 2011

Looks like I missed the boat from delaying looking at two companies suggested by a commenter on a post about Waterfurnace Renewable Energy's (TSX: WFI). "Anonymous", also a WFI shareholder, had asked whether I had looked at Computer Modelling Group (TSX: CMG) and 5N Plus (TSX: VNP). Prices of both companies are up considerably since that post. 5N has just announced an acquisition per this GlobeInvestor article, boosting its price 17% in a couple of days, which brings it to c. plus 50% since my post! CMG is up over 40% since October! Got any more stock analysis suggestions, Anon?

WFI has its conference call March 15 and full year results release March 14, which I will be reviewing. The company has already authorized and paid the quarterly dividend at the same rate as the previous one. I'm not expecting much sales or profit rises given the continuing bad state of the US housing market. The rise in energy prices is making the value proposition of its product - geothermal heating - increasingly attractive, however.

2 comments:

Anonymous here,On the surface, my portfolio of stocks make me looks like a genius:5n Plus (TSX): bought at $5-$6Computer Modelling Group (TSX): bought at $18LSB (NYSE): bought at $8Waterfurnace: bought at $22-$24

However, Waterfurnace represents at least 80% of my portfolio! So in reality I am not beating the market by such a wide margin. Despite the major gains in 5n Plus, CMG and LSB, I am not selling (I am an old fashion buy-and-hold). I am actually waiting for a pullback to buy more of 5nPlus and CMG (I absolutely love 5nPlus latest move... the major risk with this stock was its exposure to First Solar, this exposure is now significantly reduced). I might be tempted to sell LSB if it approaches $40. LSB is a competitor to Waterfurnace in geothermal AND a fertiliser play. LSB Fertiliser business significantly benefit when natural gas prices (natural gas is the main feedstock to produce nitrogen fertiliser) are low while fertiliser prices are high, which is obviously the case right now.

Sorry, I do not have any more stock picks. As I said in a previous post, I put all my eggs in the same basket and watch the basket as closely as possible. Looking forward to Waterfurnace conference call. I like their recent acquisition in Australia, but the housing market in the U.S. and natural gas prices still make me nervous.

On the fixed income side, with the Canadian dollar at 1.03, I am keeping an eye on long bonds in the U.S. (NYSE: TLT, It is an ETF with 0.15% management fee! Try to beat this with a mutual fund!) TLT is subject to the 15% withholding tax, but the withholding tax does not apply if you hold TLT in your RRSP). Ideally, I would love to buy TLT at 80$ to 85$ (depending on the exchange rate). I would be really surprise if it reaches this level, but with all the ludicrous stories about quantitative easing in the U.S. creating inflation, we never know. Quantitative easing is just a swap between short term government debt (excess reserves) and longer term bonds (typically 5-7 years government bonds). It has absolutely no bearing on inflation contrary to what most economists are saying. (note: I am an economist myself, but I generally do not have much respect for mainstream economists!)